A fatal breach of trust - and the gloves come off

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The Prime Minister and his Treasurer are now in a state of
declared hostilities for the leadership of the Government.

Their two conversations on the subject yesterday - with a
discussion of the budget sandwiched in between - led to no
agreement, compromise or plan.

Until now, Peter Costello held out hope that John Howard would
set a fixed limit to his tenure during this three-year term. But
the Treasurer now believes Howard intends holding on to the prime
ministership for as long as possible.

And Costello has made plain to Howard he no longer believes his
reassurances otherwise.

In their phone call on Saturday, Howard explained to Costello
that his remark in an interview - that he was not "going anywhere"
and intended to win the next election against Kim Beazley - had
been misinterpreted.

Costello replied that he had read the transcript of the
interview. He did not think the Prime Minister had been
misinterpreted at all.

Howard argued otherwise. But Costello responded that he thought
Howard "had it right the first time".

In other words, Costello believed Howard had spoken his mind
truthfully in the interview. Costello did not believe his
protestations and his reassurances any longer.

This represents a point of departure, a fatal breach of trust.
After nine years in government, the deputy Liberal leader was
telling his leader he neither believed nor trusted him on the
question of the leadership.

Costello now knows what some of his supporters have been telling
him for years - Howard will never willingly hand over power.
Costello will have to take it.

Yesterday, the Treasurer told reporters: "I wish that the events
of the last 48 hours had never happened." But it would have been
worse for him if the events had not happened.

True, Howard has dashed Costello's hopes of an early,
uncontested transfer of power.

But Howard's public comments are also a boon to Costello. As he
told the Prime Minister in their discussion yesterday, he had not
raised the issue of the leadership in public - Howard had. This
absolves Costello from any charge that he is the one upsetting the
status quo.

But that is exactly what he intends to do. Howard last May said
privately that his retirement plans were like the Defence Force's
Jindalee radar system - "over the horizon".

But Costello is determined to bring Howard's job tenure into
short range. He has said privately he will not be the Treasurer by
the time of the next election.

In 2 ½ years, he will have won or lost a challenge for
the prime ministership.